OIl hits record $115/barrel, $ slips and euro stable

It seems oil prices are rising up and up.

Investor confidence in $ is at an all-time low. Currency traders are all flocking to the Euro.

Check out this excerpt (Pablo Gorondi, Associated Press Writer):

"
Oil prices hit all-time highs above $115 a barrel Thursday with reports that oil and gasoline stocks in the United States were lower than expected and as the dollar hit record lows.

Light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents.

On Wednesday, the contract settled at $114.93 a barrel.

In London, Brent crude futures were up 43 cents to $113.09 a barrel

The euro hit a new all-time high of $1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at $1.5966 by midday in Europe."

All global traders are going in favoour of the Euro and oil.

Why I think the European economy is thriving is:

Excellent understanding amongst all European Union countries.

Excellent network - transportation, communications. Almost all highways are like autobahns.

Total Free Trade Zones.

You can still buy those OIL STOCKS

Oil prices, once they breached even the $110 / barrel barrier......set people thinking that it's going to level off.

But, it will climb steadily for quite some time given the tension in the Straits of Hormuz and Middle East.

Well, 40% of world's oil passes through the Starits of Hormuz !

Check out the following excerpt

“Iran's Oil Minister Kazem Vaziri-Hamaneh, said in Kuala Lumpur on Monday there is no shortage of crude in the market and OPEC has no plans to increase supplies, in the latest rebuff from the producers group to consumer nation calls for more oil.

"Now there is no shortage of crude oil in the market," he said when asked if OPEC should release more supplies to the market to temper high oil prices. "The reason for the price hike is not because of crude supply problems."

Worries over Iran's nuclear dispute with the West have been a driving factor for oil prices this year. But Vaziri-Hamaneh said the country's crude output is expected to rise to 5.3 million barrels per day (bpd) by 2014, up from 4.3 million bpd currently.”

Our take : The consumer nations’ trends, especially developing countries like China & India….are very rapid rate of increase for oil. OPEC countries’ set a quota for oil production….once that quota is set….generally they do not reverse it.

This is because the quota determines manufacturing plans, production & management plans.

But demand is going to be higher.

Also, there PROBABLY WILL BE A TENSION WITH IRAN….this nervousness will prompt some developed countries’ to get more oil to funnel it into their reserves.

This might be the right time to but oil stocks…..they are going to go up due to increased demand.